Sign in

Please complete all fields in the form to login.
Username and password fields are case sensitive

If you have forgotten your username or password please use
the forgotten your username/password link below.

Remember me, by ticking the box you
are confirming you are happy for your details to be remembered
and used the next time you use this computer to visit
eFinancialNews.com. By doing this, you'll be able to access
restricted content without logging in each time you
visit the site.

New York Fed chief predicts rise in US inflation

The Federal Reserve expects increases in US consumer prices to “firm later this year", New York Fed head Bill Dudley said on Monday, warning that underlying inflationary pressures in the domestic economy have been disguised by a one-off plunge in oil prices.

The Fed’s benchmark short-term interest rate should be around 3.5% once inflation returns to 2%, Dudley said in a speech. The deleveraging of households’ balance sheets in the US has "largely run its course", and the local housing market no longer faces an overhang of excess inventory, the influential Fed policymaker argued. He forecast a rebound in gross domestic product later this year, adding that he expects the US unemployment rate to fall to 5% by the end of the year.

The Fed “might have to move more quickly to achieve the appropriate restraint on financial market conditions" if the latter “do not tighten much in response to higher short-term interest rates”, Dudley said. The “normalisation” of US monetary policy “could create significant challenges for those emerging market economies that have been the recipients of large capital inflows in recent years”, he cautioned.